Community Development Department
Reference: Accessory Dwelling Unit Fee Reductions & Missing Middle Housing Code Amendments
To: Mayor Gregory Mills and Members of City Council
Through: Michael P. Martinez, City Manager
Prepared By: Shawn Weiman, Affordable Housing Coordinator
Date Prepared: October 1, 2025
PURPOSE
To present findings and recommendations from a study of impact fees charged for accessory dwelling units (ADUs) with the goal of further implementing the Housing Needs Assessment (HNA) strategy for adding infill housing. Also presented for discussion are two additional housing matters: incentivizing lower-cost market-rate housing and potential Land Use & Development Code (LUDC) amendments affecting middle housing.
BACKGROUND
ADU Impact Fees
Promoting ADUs as an effective strategy for increasing housing supply has been identified in recent state legislation and the HNA. Funds from the Proposition 123 Local Planning Capacity grant program have been secured for studying the impact of ADUs and how to decrease the cost of adding ADUs. Some City impact fees charged for ADUs are currently the same amounts charged for principal dwellings. Gruen Gruen + Associates was engaged to perform research and make recommendations regarding the impact fees charged for ADUs.
Incentivizing Lower-Cost Market-Rate Housing
The HNA list of strategies includes "encourage housing production at all levels and reduce housing production costs." One tactic often considered when approaching this strategy is right-sizing impact fees, or in other words, charging impact fees based on the project building size or valuation. Right-sizing comes with logistical challenges. City staff was asked to evaluate an alternative strategy of discounting impact fees for smaller homes. This similarly comes with complications; however, expanding on the idea introduces a way of directly incentivizing the desired outcome without involving fees: providing a monetary incentive after closing to th...
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